Events Calendar

Are banks special? Evidence from Bank Activism

Friday, April 21, 2017
1:00 pm - 2:00 pm
Social Science Centre (SSC)
Room: 4444
Are banks special? Evidence from Bank Activism

Are banks special? Evidence from Bank Activism

DAN Management Brown Bag Series

Presented by: Professor Jun Wang

April 21, 2017
1:00 - 2:00 pm
SSC 4444

This study investigates the impact of bank activism on wealth of target bondholders. In contrast to negative bond reactions toward hedge fund activism documented in prior literature, we find bank activism is associated with significantly positive short-run abnormal bond returns. Additionally the average bond return in the bank activism sample is significantly higher than that of the non-bank activism sample. The difference between the two groups is larger when the target firm’s credit quality is poor. Interestingly, the stock market reacts relatively less favorably to bank activism in comparison with non-bank activism. We also find that bank activists are more likely to target larger financial firms with higher leverage and lower credit quality, and that bank activism is followed by greater reduction (more negative change) in leverage and stronger improvement in credit quality and operating performance. These findings suggest that protecting bondholders’ benefit could be an essential element of bank shareholder activists’ objectives.

Open to all Faculty and Staff

Management and Organizational Studies
Jennifer Cormier
Event Type:

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